Norstead sank a week after sister contracting business went under
The M&E subsidiary of collapsed North-east contractor Metnor sank owing creditors more than £7m, an update from its administrators has said.
FRP Advisory was appointed administrator to Norstead, which was set up in 1998, at the end of February – a week after Metnor Construction was also felled.
In its update, filed at Companies House, FRP said the collapse of Metnor meant Norstead, which employed 52 people, had lost a major customer, leading to the firm “becoming cash flow and balance sheet insolvent”.
It added that the impact of covid-19, Brexit and the increase in materials costs also squeezed the firm’s profitability.
In its last set of accounts filed at Companies House, Norstead, based at Killingworth, just north of Newcastle, had a turnover of £20m in 2021 and made a £133,000 profit after falling nearly £900,000 into the red the year before.
FRP said that plans to sell assets and novate contracts to the firm’s management hit the buffers meaning that staff not already made redundant lost their jobs a day before the administration was confirmed on 28 February.
According to FRP, employees are owed £108,000 in missing wages and holiday pay but are expected to get this back while HMRC, owed around £50,000, is also set to get its money back as well.
Unsecured creditors owed £5.4m have been told they will get some money back “in due course”.
Norstead’s creditors include parent Metnor Group, owed nearly £386,000, and sister firm Metnor Construction, which is owed £500,000.
A further dozen firms are owed £100,000 or more with the largest amount, £870,000, due to an insurance firm while one air conditioning manufacturer is owed close to £661,000.